Legislature(2001 - 2002)
04/09/2001 03:20 PM House L&C
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
April 9, 2001
3:20 p.m.
MEMBERS PRESENT
Representative Lisa Murkowski, Chair
Representative Andrew Halcro, Vice Chair
Representative Kevin Meyer
Representative Pete Kott
Representative Norman Rokeberg
Representative Harry Crawford
Representative Joe Hayes
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 225
"An Act relating to municipal taxation of alcoholic beverages
and increasing the alcoholic beverage tax rates."
- HEARD AND HELD
PREVIOUS ACTION
BILL: HB 225
SHORT TITLE:ALCOHOLIC BEVERAGE TAX
SPONSOR(S): REPRESENTATIVE(S)MURKOWSKI
Jrn-Date Jrn-Page Action
03/30/01 0789 (H) READ THE FIRST TIME -
REFERRALS
03/30/01 0789 (H) L&C, FIN
04/03/01 0830 (H) COSPONSOR(S): HUDSON
04/09/01 (H) L&C AT 3:15 PM CAPITOL 17
WITNESS REGISTER
PAM WATTS, Executive Director
Governor's Advisory Board on Alcoholism & Drug Abuse
Department of Health & Social Services
PO Box 110608
Juneau, Alaska 99801
POSITION STATEMENT: Testified in support of HB 225.
ANNETTE COGGINS, Executive Director
Aiding Women in Abuse and Rape Emergencies
PO Box 20809
Juneau, Alaska 99801
POSITION STATEMENT: Testified in support of HB 225.
BUTCH TANGNEY
ODOM Corporation
5452 Shaune Drive
Juneau, Alaska 99801
POSITION STATEMENT: Testified in opposition to HB 225.
ANNE KINTER
17345 Glacier Highway
Juneau, Alaska 99801
POSITION STATEMENT: Testified on behalf of herself in support
of HB 225.
DAVE HEIMBIGNER, Southeast Sales Supervisor
ODOM Corporation
PO Box 33102
Juneau, Alaska 99801
POSITION STATEMENT: Testified on HB 225.
JOHN MANNING, Owner
Duck Creek Market
PO Box 34262
Juneau, Alaska 99801
POSITION STATEMENT: Testified on HB 225.
ELMER LINDSTROM, Special Assistant
Office of the Commissioner
Department of Health & Social Services
PO Box 110601
Juneau, Alaska 99811
POSITION STATEMENT: Testified on HB 225.
HOWARD SCAMAN, Secretary
Council on Alcohol Abuse & Public Safety
PO Box 23007
Juneau, Alaska 99802
POSITION STATEMENT: Testified in support of HB 225.
CALEB STEWART
925 Calhoun Avenue
Juneau, Alaska 99801
POSITION STATEMENT: Testified on behalf of himself in support
of HB 225.
ELLEN NORTHUP, Site Manager
Juneau Senior Center
PO Box 211231
Auke Bay, Alaska 99821
POSITION STATEMENT: Testified on behalf of herself and the
Juneau Senior Center in support of HB 225.
LINDA MACAULAY
15575 Glacier Highway
Juneau, Alaska 99801
POSITION STATEMENT: Testified on behalf of herself in support
of HB 225.
TOM RUTECKI
1513 Ling Court
Juneau, Alaska 99801
POSITION STATEMENT: Testified on behalf of himself in support
of HB 225.
GENE MILLER, President
Juneau Chapter
Mothers Against Drunk Driving
211 4th Street
Juneau, Alaska 99801
POSITION STATEMENT: Testified in support of HB 225.
CHIP DUGGAN, Owner
Duggan's Waterfront Pub
120 West Bunnell
Homer, Alaska 99603
POSITION STATEMENT: Testified on HB 225.
ANNETTE CRAIG, Operations Manager
Don Jose's, Inc.
127 West Pioneer Avenue
Homer, Alaska 99603
POSITION STATEMENT: Testified on HB 225.
KAREN BERGER, Owner
Homer Brewing Company
1562 Homer Spit Road
Homer, Alaska 99603
POSITION STATEMENT: Testified in opposition to HB 225.
ALEX FLYUM, Co-Chairman
House Management Committee
Homer Elks Lodge 2127
215 West Jenny Lane
Homer, Alaska 99603
POSITION STATEMENT: Testified in opposition to HB 225.
JULIE SERSTAD, Director
Public Nursing
Norton Sound Health Corporation
Nome, Alaska 99762
POSITION STATEMENT: Testified in support of HB 225.
TONY KRIER
PO BOX 385
Nome, Alaska 99762
POSITION STATEMENT: Testified as a business owner on HB 225.
JOHANNA BALES, Revenue Auditor
Department of Revenue
550 West 7th Avenue
Anchorage, Alaska 99501
POSITION STATEMENT: Explained the fiscal note for HB 225.
BRETT FRIED, Economist
Tax Division
Department of Revenue
PO Box 110420
Juneau, Alaska 99811
POSITION STATEMENT: Explained the revenue increase for HB 225.
ANDY SWANSTEN, Operations Director
Gastineau Human Services Corporation
PO Box 210152
Juneau, Alaska 99821
POSITION STATEMENT: Testified on HB 225.
GREG PEASE, Executive Director
Gastineau Human Services Corporation
PO Box 20065
Juneau, Alaska 99802
POSITION STATEMENT: Testified on HB 225.
KEVIN RITCHIE, Executive Director
Alaska Municipal League
217 2nd Street
Juneau, Alaska 99801
POSITION STATEMENT: Testified in support of HB 225.
CINDY CASHEN
Mothers Against Drunk Driving
211 4th Street
Juneau, Alaska 99801
POSITION STATEMENT: Testified in support of HB 225.
DOROTHY CUNNINGHAM, President
Kenai Cabaret Hotel Restaurant & Retailer Association;
Owner, Vagabond (ph)
PO Box 1662
Kenai, Alaska 99611
POSITION STATEMENT: Testified on HB 225.
GARY SUPERMAN, Owner
Hunger Hut
PO Box 7002
Nikiski, Alaska 99635
POSITION STATEMENT: Testified on HB 225.
CHRYSTAL SCHOENROCK
Cabaret Hotel Restaurant & Retailer Association;
Owner, 4 Lands Bar
PO Box 8583
Nikiski, Alaska 99635
POSITION STATEMENT: Testified on HB 225.
JAMES FITZGERALD, Owner
The Rendezvous
PO Box 1880
Kodiak, Alaska 99615
POSITION STATEMENT: Testified in opposition to HB 225.
ANDY LUNDQUIST, Owner
Tony's Bar
PO Box 589
Kodiak, Alaska 99615
POSITION STATEMENT: Testified in opposition to HB 225.
APRIL SMITH, Manager
B & B Bar
PO Box 4042
Kodiak, Alaska 99615
POSITION STATEMENT: Testified in opposition to HB 225.
ELIZABETH STARK, Bartender
Mecca Lounge
314 B Cope
Kodiak, Alaska 99615
POSITION STATEMENT: Testified in opposition to HB 225.
BILL MARSH, Manager
Mecca Lounge
710 Mission Road
Kodiak, Alaska 99615
POSITION STATEMENT: Testified in opposition to HB 225.
SUSAN PHIPPS
National Alliance for the Mentally Ill Juneau
PO Box 32386
Juneau, Alaska 99803
POSITION STATEMENT: Testified in support of HB 225.
JANE DEMMERT, Executive Director
Alaska Commission on Aging
PO Box 110209
Juneau, Alaska 99811
POSITION STATEMENT: Testified in support of HB 225.
MATT FELIX, Director
National Council on Alcohol and Drug Abuse
3970 North Douglas Highway
Juneau, Alaska 99801
POSITION STATEMENT: Testified on HB 225.
DON SKEWIS, President
Cabaret Hotel Restaurant & Retailer Association
1402 Gambel
Anchorage, Alaska 99501
POSITION STATEMENT: Testified on HB 225.
TIM SCHRAGE
944 West 11th
Anchorage, Alaska 99501
POSITION STATEMENT: Testified in opposition to HB 225.
JAMES CRARY
2720 Kempton Hills Drive
Anchorage, Alaska 99516
POSITION STATEMENT: Testified on HB 225.
KATHRYN BOGGS-GRAY, Coordinator
Economic Intervention Project
Akeela, Inc.
4111 Minnesota Drive
Anchorage, Alaska 99503
POSITION STATEMENT: Testified in support of HB 225.
OBED NELSON
3030 Pleasant Drive
Anchorage, Alaska 99502
POSITION STATEMENT: Testified in support of HB 225.
JEFF BEALLES, Program Director
Catholic Social Services
Brother Francis Shelter
1001 East 3rd
Anchorage, Alaska 99503
POSITION STATEMENT: Testified in support of HB 225.
TRICIA LILLIBRIDGE, Emergency Nurse
Providence Hospital;
Injury Prevention Educator
Alaska Injury Prevention Center
6551 Limestone Circle
Anchorage, Alaska 99516
POSITION STATEMENT: Testified in support of HB 225.
DICK ELLSWORTH, Owner
Ivory Jacks
2581 Goldstream Road
Fairbanks, Alaska 99709
POSITION STATEMENT: Testified in opposition to HB 225.
LARRY HACKENMILLER, Owner
Club Manchu
2712 Jessie Street
Fairbanks, Alaska 99701
POSITION STATEMENT: Testified in opposition to HB 225.
RANDY KELSCH
636 28th Avenue
Fairbanks, Alaska 99701
POSITION STATEMENT: Testified in opposition to HB 225.
ACTION NARRATIVE
TAPE 01-51, SIDE A
Number 0001
CHAIR LISA MURKOWSKI called the House Labor and Commerce
Standing Committee meeting to order at 3:20 p.m. Members
present at the call to order were Representatives Murkowski,
Halcro, Crawford, and Hayes. Representatives Meyer, Kott, and
Rokeberg joined the meeting as it was in progress.
HB 225-ALCOHOLIC BEVERAGE TAX
CHAIR MURKOWSKI announced that the committee would hear HOUSE
BILL NO. 225, "An Act relating to municipal taxation of
alcoholic beverages and increasing the alcoholic beverage tax
rates."
Number 0143
CHAIR MURKOWSKI, speaking as the sponsor of HB 225, informed the
committee that when she introduced HB 225 there were two
components. The first would increase the excise tax on alcohol,
something that has not been done since 1983. This solution is a
result of the Criminal Justice Assessment Commission's study
that came out last summer and analyzed what's going on in Alaska
in terms of alcohol abuse, the associated problems, and the
expense to the state.
CHAIR MURKOWSKI reported that the study suggested the increase
should be 25 cents a drink. However, numerous groups and
organizations have suggested that the number be lower. In the
bill, therefore, there is a dime-a-drink increase over the
existing tax. She remarked that there are those who will argue
that there isn't a rational basis for the amount of the
increase. She addressed the committee and stated:
We're going to be hearing a lot of statistics today.
If you want to be impressed by statistics, I would
suggest that you look to the sponsor statement, and
all you need to see is that we're number one. We're
number one with regard to alcohol in every way, shape,
and form. And, unfortunately it's all negative.
CHAIR MURKOWSKI directed the committee to one figure in the
sponsor statement that reads, "A National Institute of Health
study indicates that the negative impacts associated with
alcohol abuse in Alaska cost more than $500 million per year."
She explained that about $250 million is the direct cost
associated with alcohol use and abuse in Alaska. This $500
million number is the more indirect cost.
Number 0448
CHAIR MURKOWSKI explained that when she looked into how the
state could collect a tax for the municipalities, it was a
problematic collection process; it would be a considerable
expense to the state. Therefore, that has been deleted from
the original HB 225, and language in Section 1 [Version L]
eliminates that protective language whereby municipalities are
not able to institute an alcohol tax unless there is an existing
sales tax in place.
REPRESENTATIVE HALCRO made a motion to adopt the proposed
committee substitute (CS), version 22-LS0806\L, Cook, 4/9/01, as
a work draft. There being no objection, Version L was before
the committee.
Number 0669
PAM WATTS, Executive Director, Governor's Advisory Board on
Alcoholism & Drug Abuse, Department of Health & Social Services
(DHSS), came forth and stated:
I'm here today on behalf of the board to ask for your
strong support for a substantial increase in the
alcohol tax to more closely reflect the true cost of
alcohol to the state. There's been no increase in
this tax, as you heard, since 1983; that tax was not
indexed for inflation. Efforts to increase the tax in
1989 failed, due largely to pressure from the alcohol
industry. We estimate that since then the state has
lost approximately $41 million in revenues due to that
tax not being indexed.
We can no longer afford to subsidize alcohol when the
actual cost to Alaskans is estimated at approximately
$250 million per year and climbing. The amount of the
proposed increase in this legislation will begin to
help ... our ... coffers that are heavily impacted
across departments by alcohol-related expenses,
although there will continue to be a very significant
gap between public resources used and revenues
received sales and consumption.
The current tax only covers one dollar of every 20 the
state spends on cleaning up the negative consequences.
Many other states with lower alcohol taxes have a
state sales tax that helps with that burden. Some
people fear the loss of profits to the alcohol
beverage industry.
Our board has been advised by some citizens after the
last tax increase that alcohol prices in some areas
were raised in excess of the tax. So, alcohol sales
did not appear to decrease. Research shows that the
most affected group reacting to increased costs will
be underage drinkers, and we believe this is an
outcome most people will support. We're all impacted
by the negative consequences of alcohol, whether we
drink or not.
A significant amount of our taxes and state revenues
go toward cleaning up the problems caused by alcohol
to the tune of $250 million ... per year: public
safety, courts, corrections, emergency medical
services, lost productivity, child protection and
foster care service, public assistance, special
educational and other services for FAS [Fetal Alcohol
Syndrome] children that average $1.4 million per ...
child in a lifetime. ...
Yet our revenues from the alcohol tax are only a
fraction of the amount spent on cleaning wreckage.
The state legislature has unanimously gone on record
for the last six years endorsing the merits of
sobriety awareness by supporting resolutions of that
title. An element of such resolutions is aimed at
reducing the burden on government by not having to
exhaust its resources to pay for the pervasive
problems caused by alcohol.
Raising the excise tax on alcohol could assist
government with the burden by people paying
essentially for what they use. Persons who don't
imbibe don't pay; those who drink moderately pay
moderately; those who drink heavily pay more. For
this state, that may be the only way that it's
reimbursed by some citizens for the costs of their
alcohol use to the state. The Advisory Board on
Alcoholism and Drug Abuse strongly encourages your
support of this legislation to raise the excise tax at
least by one dime a drink.
Number 0887
ANNETTE COGGINS, Executive Director, Aiding Women in Abuse and
Rape Emergencies (AWARE Inc.), came forth and stated that she
has worked with both victims and offenders of domestic violence
and sexual assault since the mid-1970s. Although domestic
violence and sexual assault are not caused by alcohol, there is
a high correlation between people who abuse alcohol and people
who batter and rape. She stated:
One of the things we see with perpetrators of domestic
violence is that there's increased injury to the
victim when batterers use alcohol. ... [Batterers]
that begin physically abusing their victim, when their
hand starts hurting, they usually stop that behavior.
But when they are under the influence of alcohol and
their hand is numb, they tend to beat their victim
more severely and we see increased injuries. With
victims, often the batterer encourages the victim to
drink along with them, or many victims turn to alcohol
to cope with the abuse they're living with.
Some of our highest costs [are due to] women who
become alcoholics who are victims of domestic violence
and eventually lose custody of their kids to state
custody. It's a huge cost to the state, and those
women need treatment and specialized services, both
for their alcohol abuse and for the domestic violence
they've suffered.
Another thing that we see with sex offenders is that
oftentimes sex offenders will get their victims to
drink in order to lower their inhibitions. ... When
they're drunk or passed out is when they rape them.
Often those victims are the ones that don't come
forward to report the crime, particularly high [school
students] and young adults. When we go in, doing
prevention programs in the school, we hear over and
over of young victims who are partying, they're in
date-rape situations, and they're reluctant to report
those crimes because they feel responsible somehow
because they were drinking at the time of their rape.
The other thing with this is that if those victims do
come forward, often the system doesn't see them as
credible witnesses and is not able to hold that
perpetrator accountable for those crimes.
Number 1065
BUTCH TANGNEY, ODOM Corporation, came forth and stated:
Two-thirds of the American population chooses to
consume alcohol, while only one-third does not. And
it is very simplistic to look at all of these social
problems and point the finger at alcohol without
recognizing that these same people also have the
highest statistic of household violence and child
abuse and drug abuse and a number of other problems
that are not associated with alcohol. In fact, the
primary prevention of alcohol and alcoholism study by
Dr. David Joshua Pittman (ph) points out that any
primary prevention program for alcoholism or other
alcohol-related damage in the United States must start
from the fundamental premise that the overwhelming
majority of Americans who drink have no problems
associated with their drinking.
Thus, any federal program for the prevention of
alcoholism or alcohol-related damage will be cost-
ineffective if it targets the efforts toward the total
population, especially if that policy attempts to
penalize all consumers of beverage alcohol by price
increases or through increased taxation of other
devices which make the product more difficult to
obtain. And it has been proven that these do not
affect the hardcore drinker.
In terms of the National Transportation Safety Board,
their current study shows 12 points they would like
governors and legislative leaders to consider in the
prevention of alcohol-related traffic deaths, none of
which include alcohol-related tax increases. All of
these go after, however, the hardcore drinker, who is
a person who consumes alcohol in a large quantity and
over a very high drug/alcohol blood concentration.
These people are responsible for over 80 percent of
the traffic accidents where a driver has a fatality
and that driver goes over the current legal limit of
intoxication.
While the rest of traffic accidents have gradually
increased, alcohol-related traffic accidents have
drastically decreased over the last 15 years. Studies
indicate that although we're counting every single
person with any BAC [blood alcohol concentration] as
being ... alcohol-related, ... the greatest majority
of those people are over the current legal limit. ...
To impose a solution that would be detrimental to all
the consumers in our state would not address this
problem, and in fact would penalize a small portion of
our [businesses]. ... I'll leave another member of the
industry to deal with the deceptive nature of a 10-
cents-a-drink categorization of that tax as well.
Number 1250
ANNE KINTER came forth and told members she was speaking as a
concerned grandmother, widow, and mother who has personally seen
the damage and heartbreak that alcohol abuse can cause to the
drinker, the family, and the public. She urged passage of the
bill "with the increase."
JUDY McDONALD, Co-Owner, Lucky Lady, Inc., came forth and
stated:
While I'll go along with an increase because it has
been so long, 10 cents a drink is not really logical
as far as staying in business. At this point, many
people I know who are just new in the business will
never be able to make it. They're going to lose
employees, first thing. It's not an easy business
right now to begin with; however, it's there. ...
Juneau is unlike Anchorage or any place else because
we do pay an additional sales tax here on alcohol
only, plus the excise tax. And the way I figure it,
when it comes to the end of this, this is not just a
10-cent-per-drink increase; it's a 300 percent total
increase in taxes that will be paid. ...
So, what I would like to do [is] not to increase it
this much, but also to do a little different training
[for] the abuser. When they're picked up three times
for ... drunk driving ... and they go to jail and they
have to do six weeks of school, ... there has got to
be some other kind of treatment ... to make them not
to abuse it again. Like I've heard before, there are
many people that drink alcohol that do not abuse it,
and I just think that there should be other solutions,
other than more money going into the same programs and
the same people going through them over and over
again.
Number 1403
CHAIR MURKOWSKI informed Ms. McDonald that legislation was
passed out of the House that would set up therapeutic courts.
She said it's somewhat experimental, but the results so far have
been promising. She asked Ms. McDonald, as a business owner,
what increase she thinks is logical.
MS. McDONALD responded that she thinks there should be a 10 to
12 percent gradual increase. She noted that if this passes,
something she sells for $4.00 a drink will be $6.50 to $7.00,
and her customers are not going to go for that.
REPRESENTATIVE HALCRO asked Ms. McDonald whether she has a drink
menu in her establishment with prices.
MS. McDONALD answered no.
Number 1519
DAVE HEIMBIGNER, Southeast Sales Supervisor, ODOM Corporation,
came forth and said he would try to put things into perspective,
regarding both the retail cost of goods and how the consumer is
going to pay for them. He stated:
On this tax, the tax is not just 10 cents a drink.
We, from the wholesale perspective, ... actually pay
the wholesale tax on this excise tax, and it could
potentially - by the time you factor everything in -
be roughly ... $1.42 a gallon [for malt beverages],
$3.41 on wines, and up to $18.40 a gallon on distilled
spirits.
When these taxes get posed and we have to pay them, we
base our prices on an "FOB" program like you'll see
out of Seattle. That tax actually goes into our costs
of goods, and we put our percentage markup on it. The
retailers will put their percentage of markup on it as
well. So, you could potentially see a tax on beer,
for instance, go up actually ... to $6.40, and we
would be up to $1.36 a bottle, and taxes on a single
bottle of distilled spirits would go up to $7.30.
I think everyone agrees that there has to be something
done with the chronic abuser of alcohol. And they are
the ones that are generating probably 80 percent of
the problems; it's not the two-thirds of the people
that choose to consume it responsibly. I guess my
question back to you is, we realize that there's a
problem, but [with] the taxation dollars that [are]
going to be generated by any type of additional tax,
we're not guaranteed that they're ... actually going
to ... solve the problems.
REPRESENTATIVE HALCRO asked Mr. Heimbigner whether a majority of
the hard alcohol and spirits are imported from other countries.
MR. HEIMBIGNER stated that there is a large amount that does get
imported. On the beer side, the domestics are the majority that
are sold, and the largest percentages of wine are probably
domestic.
Number 1711
JOHN MANNING, Owner, Duck Creek Market, came forth and stated:
As a store owner, this might not have as much of an
effect on me personally as it would on my customers.
When it gets down to it, ... alcohol competes with
other beverages also. So when you start making
alcohol very expensive, people look for other options
out there. ... Also, I'm a consumer of alcohol; I'm
not an abuser of alcohol. ...
I know there are expenses to the state out there, but
I think there are other tools the legislature may have
to deal directly with. ... And I think some of those
are maybe directly after the person who's causing
these problems. As a consumer of alcohol, I don't
really feel it's fair for me to have to pay more to
buy my beer or wine or whatever, to pick up the tab
for some abusers.
Number 1803
ELMER LINDSTROM, Special Assistant, Office of the Commissioner,
Department of Health & Social Services (DHSS), came forth in
support of HB 225. He stated:
Hospital emergency room visits, suicide attempts,
child abuse, domestic violence, sexual assault, on and
on and on. Many of those problems come to roost in my
department. ... I'm willing to use two examples, but I
think they're important examples because they were
issues that the legislature worked on extensively.
And I think both the executive and the legislature
would regard them as successes, and yet here I am
today to tell you that these two items are now bumping
up against the alcohol issue - and it wouldn't have
necessarily been expected when we were all working in
these areas. And they are, first and foremost,
welfare reform activities that we have worked on
together in the last few years.
... We've seen caseloads decline in the state by, I
believe, close to 50 percent, if not slightly over 50
percent. Well, guess what? We are now coming toward
the point in time where the statutory time limits are
going to be impacting folks who've been on the
caseload for a long period of time. And guess who
those people are who are going to fall off the cliff?
There is a large percentage ... of them who are unable
to go to work, [and] who are unable to care for their
families because they have significant alcohol abuse
issues in their family.
Now, that wasn't something we talked about a lot when
we were all working on the welfare reform bill, but it
is something that we are acutely aware of today. And
those very, very difficult-to-serve folks are people
we have to keep in mind here in the next year or two
as we approach the time limit, and you are going to
hear time after time how alcohol abuse is a key
element in our inability to get folk to get into the
workforce and support themselves.
The other area ... was the reform of the child
protection system. Major legislation passed ... three
years ago, ... and one of the key elements of that
reform was, "We don't want to see kids lingering in
foster care for years and years and years. We think
kids ought to have a stable, permanent home." And so,
as part of the reform of that system, you, in the law,
put very strict time limits, where families are
expected to get their act together in a relatively
short period of time. And if they are unable to do
so, then we need to look for another type of permanent
placement for the children.
And guess what's happening again? Who are the
families who we are having a hard time getting to
straighten out and reassume responsibility for their
own children? They are families where there is
substance abuse in those families. And those people
are not able to come to grips with that problem,
oftentimes, in a timely fashion, to some extent
because [they] don't have sufficient treatment
resources available to get them into treatment where
they ought to be getting treatment - but, once again,
an area where we all did a lot and should be proud of
our efforts. But lo and behold, what is cropping up
as a major impediment to making further progress?
Alcohol abuse.
REPRESENTATIVE HALCRO asked what the department's guess is of
how much alcohol cost [Alaska] last year.
Number 2011
MR. LINDSTROM answered that he doesn't have a good number to
give to the committee; however, it is tremendous. In response
to a further question, he said in nominal dollars [it increases
year after year]. He stated that he couldn't say whether
alcohol abuse is more of a problem this year than last year.
REPRESENTATIVE KOTT referred to the welfare issue and asked Mr.
Lindstrom how he tracks parents who are substance abusers or
addicted to alcohol.
MR. LINDSTROM responded that as the caseloads have declined
dramatically, [DHSS] has been able to track the length of time
people are part of the caseload. As it approaches the time when
they may be subject to being removed from the caseload, [DHSS]
engages in case management of the difficult-to-serve families.
Therefore, [DHSS] is getting assessments of these families'
specific problems. Through evidence gathered, [DHSS] knows that
alcohol is a significant key factor in their inability to get
into the workforce and stay in the workforce.
REPRESENTATIVE KOTT asked Mr. Lindstrom whether [DHSS] starts
tracking the families during their fourth year [of benefits].
Number 2174
MR. LINDSTROM replied that he thinks this is the fourth year
since the welfare reform bill passed; therefore, he doesn't have
any information prior to the welfare reform. He remarked that
as people stay on the caseload, [DHSS] begins to focus on those
difficult-to-serve people to determine what can be done to get
them employed before they run out of benefits.
REPRESENTATIVE KOTT asked whether a determination could be made
that substance abuse problems are a consequence of being on
welfare.
MR. LINDSTROM responded that he wouldn't know how to answer
that.
Number 2261
HOWARD SCAMAN, Secretary, Council on Alcohol Abuse & Public
Safety (CAAPS), came forth stated:
We're essentially the same old clergy group that was
here 18 years ago when the last tax increase was
passed in 1983. First of all, I would like to thank
the committee, and Chairman Murkowski specifically,
for honoring the request of CJAC [Criminal Justice
Assessment Commission] and all of the other groups.
You're considering the 20-cent increase, which is what
we all asked for. I think it's very wise of you to
consider it in two 10-cent increments also. We would
also like to go on public record that it's no secret
that an attempt was made with the various components
of the liquor industry and our groups to see if ...
some sort of consensus could be reached.
As we all know, there is no single liquor industry
anymore. It's divided into a group of different
components. ... [He referred to a case of beer.] This
is a 12-pack of beer that was purchased here in
Juneau, Alaska, a few months ago for $4.49. ... We
went into the same store, into the retail portion,
and purchased 12 cans of Coca-Cola for $5.99. I don't
want to hear that a $1.20 increase of this price is
going to bankrupt the liquor industry; it isn't. ...
Excise tax has gotten cheaper and cheaper and cheaper
every year because of inflation. If you keep the tax
rate identical, inflation goes up [and] the cost comes
down, and that's what's happened here.
If you compare the retail prices, what will happen
with this is that cheap beer, cheap wine, and cheap
vodka is going to go up in price significantly, I
think probably 25 to 28 percent. Premium brands will
go from ... $13.00; if you add another $1.20 on, it
will go up 9 percent. At the retail bar level, ... if
there was a 10-cent increase in your PC (pouring
cost), ... how much are you going to mark up this
$4.00 beer? I would mark it up at least a quarter,
and blame me and these other prohibitionists. In our
estimation - and yes, there will be markup at the
wholesale level, and yes, the retailer will mark it -
that is the idea, that is what we all attempting to
accomplish: to get cheap beer up in price
sufficiently so it is at least as expensive as Coca-
Cola. ... What happened last time was, everybody sold
a little bit less liquor and the local retailers made
a little bit more money. That's what will happen with
this one also.
Number 2421
MR. SCAMAN concluded by saying:
What we'd urge you to do is pass this bill out with
the state percentages as you have them right now. We
are not authorized to support a state sales tax. We
will support an excise tax if you authorize
municipalities to do that.
REPRESENTATIVE HALCRO stated that the committee heard earlier
testimony that in some instances a $4.00 or $4.50 drink, after
this tax is passed, would suddenly be $6.75 or $7.00. He asked.
Mr. Scaman to comment on that.
MR. SCAMAN responded that he can't see how that could be. He
said a bottle of beer, when it comes in, may cost $1.80. Right
now there is 3.3 cents' worth of state tax with what the
retailer pays for the beer. [With this bill] an additional 10
cents will go into the PC.
TAPE 01-51, SIDE B
Number 2477
REPRESENTATIVE KOTT, in response to Representative Halcro's
question, said he thinks an owner can mark it up whatever he or
she wants to, in order to say to the consumer, "The legislature
passed this on to you." He asked whether Mr. Scaman thinks
there is any correlation between the increase in cost of a 12-
pack of beer and those marketers of Pepsi or Coca-Cola who will
raise their prices because of the competition.
MR. SCAMAN responded that [there conceivably could be]; however,
Coca-Cola, Pepsi, milk, and lemonade do not cause alcohol abuse.
That's the issue, he said. About 35 or 40 percent of the people
in the state do not drink; 20 percent of the rest drink 80
percent of the [alcohol]. He stated that what happens with an
excise tax is that [the 80 percent] is becoming more responsible
for paying their share of the costs.
Number 2367
CALEB STEWART came forth on behalf of himself in support of HB
225. He stated that he doesn't drink, and yet he is paying for
the problem. He remarked that the legislature might support a
new private prison in Kenai, which is going to try to do
something about the problems that the prison population has with
the use of alcohol; that is going to be done for $30 per
prisoner a day less than the state does today. This bill might
help bring in the revenue that allows that type of effort to
succeed.
CHAIR MURKOWSKI remarked that those who don't drink are also
shouldering the burden for the expenses associated with alcohol.
REPRESENTATIVE KOTT stated that Alaskans don't pay any income
tax or sales tax, and asked Mr. Stewart how he is paying for
part of the problem by not drinking.
MR. STEWART responded that he subscribes to the [concept of
former governor] Walter Hickel of an owner-state and being a
shareholder. Indirectly, Mr. Stewart said, the general fund is
his.
REPRESENTATIVE KOTT stated that he drinks very little, and asked
why he should pay for some of the costs when he is not part of
the problem.
MR. STEWART responded that it will be paid for, one way or
another, through the general fund. He said he is willing, as a
citizen, to put money in and support society.
REPRESENTATIVE KOTT asked Mr. Stewart whether he would put in
$400 of his permanent dividend fund to take care of this
problem.
MR. STEWART answered that he would.
Number 2084
REPRESENTATIVE HALCRO asked Mr. Stewart:
If you embrace the argument that we're taxing
responsible drinkers to pay for the irresponsible
drinkers, would it be safe to say that the responsible
drinkers already ... are involved in this? ... They
are in the cars that are hit by drunk drivers.
They're certainly involved in the property damage
that's caused by those that abuse alcohol.
MR. STEWART agreed.
Number 1992
ELLEN NORTHUP, Site Manager, Juneau Senior Center, came forth on
behalf of herself and the Juneau Senior Center. She stated:
I have had a unique experience with alcohol abuse when
I ran the Glory Hole for eight and a half years, the
homeless shelter [and] soup kitchen in Juneau. I
didn't now what the letters FAS stood for when I went
to work there. But after eight years I knew ... too
well what it stood for, and I had personally helped
several women who were pregnant stay sober while they
were pregnant so they wouldn't give birth to a person
with half a brain. One of the things I heard again
and again and again from people coming in to cook at
the Glory Hole in the evenings - church members,
Rotarians, all sort of folk - was, "What's that guy
doing here? He looks perfectly capable of holding a
job; he looks like he's in good shape. Why am I
feeding this person?" And I would say, "Go have a
conversation with him and then come back and tell me
if you would hire him for anything."
When your mother drinks alcohol when she's pregnant,
she causes, at different times in the fetus's
development, for the brain to not develop. So you see
a perfectly beautiful person - and I'm thinking of one
particular lady right now who is pregnant and who is
FAS, who is just gorgeous, and who speaks fairly well
- and you would think this person had all their brains
intact until you try to do something logically with
them and you find that they don't have that part of
our brain that helps them to follow the train of
thought and go to a logical conclusion with anything.
And now this poor lady is trying to get through being
pregnant, and her support group is trying to help her
and they don't even know what to do, because there's
been no real treatment plans for how [to] handle a
pregnant person who's only half up here [she pointed
to her head]. And it's her constitutional right to
have that child, and she's chosen to do that.
... I'll have a glass of wine from time to time - I
used to be a heavy drinker. I used to tell them at
the Glory Hole I used to be a drunk ... 'til one day I
said, "Oh, my God, I don't want to live this way," and
I quit. But I can tell you right now that putting a
tax on it will not make me not have a glass of wine
when I go to the Broiler and have a steak. ... It will
not stop a moderate drinker from having a glass of
wine when they go to have drink. ... Everybody I've
ever known that drinks is just like all the people
that smoke and who still smoke even though the darn
cigarettes are costing so much you can't even believe
it. ... So we may as well have the cotton-picking
money off of it to help pay for some of this stuff and
to try to come up with some educational things to help
people like the pregnant FAS lady.
MS. NORTHUP concluded by saying:
I feel like maybe the previous gentleman was pretty
much on it, as far as all of us being owners of this
state and owners of this money. And I'm really tired
of seeing everybody trying to figure out where to find
education money, and trying to figure out where to
find money to fix roads and to fix health and villages
... when all this money's being blown because of
alcohol abuse and misuse.
Number 1687
LINDA MACAULAY came forth on behalf of herself in support of HB
225. She stated:
I am a victim of a drunk driver. [She referred to a
picture and stated] the man on my right was my husband
of 39 years. His name was Ladd Macaulay, and he was
killed on the Seward Highway 355 days ago. On
Wednesday, April 19th, at approximately 4:09 in the
afternoon, he and his boss, Martin Richards [who was]
the director of the Alaska Division of Investments
with the Department of Community & Economic
Development - they worked together and they were
traveling with another business associate, Steve McGee
- they were returning home from a one-night business
trip.
Like I said, it was 4:00 in the afternoon - one would
think it was safe - when they were hit head-on by a
drunk driver with a BAC of .258. That drunk driver's
blood was not taken from his body for two and a half
hours after the crash; I can't imagine what it must
have been at the time of the crash.
Because a man chose to drive while extremely
intoxicated, two wonderful men lost their lives.
There are no words that can describe what this loss
has meant to so many - not just myself, but to others:
we have four grown children, we now have eight
grandchildren - we had seven when Ladd was killed -
and countless others. My husband was a very special
man. He was a Christian in the truest sense of the
word, and he touched everyone who ever met him. He
was my life, and after nearly a year, I still have no
idea how to continue without living with him. I try
to take one day at a time; often I'm taking five
minutes at a time.
It's my belief that an alcohol tax can make a
difference. Perhaps the man who killed my husband
couldn't have afforded the beer and whiskey that he
drank while driving that day. After drinking on the
plane while coming off of a two-week stint from the
Slope, he continued to drink in a bar, the airport,
with friends; he'd had a rough two weeks. While he
was already intoxicated, he stopped and purchased this
beer and whiskey. Most of the whiskey was gone when
he hit the car head-on. He had $7.03 left on his
person.
It's also my belief that many lives will be saved by
the passing of the alcohol tax bill. But more
importantly, if just one person's life is saved, it
would be well worthwhile. Perhaps that life saved
would be your own, or someone that you loved very
much. If you knew this in advance, would it change
the way you vote? I suspect it might make a
difference. My life and that of my family's will
never again be the same. Our joy - the joy is gone,
but perhaps the passage of an alcohol tax will save
the same devastation from happening to someone else.
From the bottom of my heart, I sincerely hope so.
Number 1453
TOM RUTECKI came forth on behalf of himself in support of HB
225. He stated:
I'm a supporter of increasing this tax, first of all
as a person that was directly impacted by a drunk
driver. My officemate of 16-plus years, [who] was
also a mentor and a dear friend, was killed last July
by a drunk driver. His name was Richard Carlson (ph).
And he was honored by the legislature for his
accomplishments to his profession - fishery biology -
and to the community. And I think many of your names
are on that proclamation that's hanging at the Auke
Bay lab. Similar to what happened to Ladd Macaulay,
the man that killed Dick Carlson was intoxicated, and
he stopped at a local tavern and he became more
intoxicated. During the trial it was proven that
people said he appeared to be intoxicated, and was
given more alcohol. And shortly after he left the
bar, he struck Dr. Carlson, killing one of our great
people of our community and a good friend of mine.
I think if we had some of this money, maybe we could
use it to enforce rules, or maybe people who owned the
establishments would be more weary of serving a drunk
person if they knew there was enforcement out there to
check on it. Maybe it wouldn't, but it can't hurt.
And also, from another standpoint as a citizen, there
was a fellow in town here that [is] a member of the
majority party [and] lives in the Lake Clark region,
and he thinks we need to get some more revenue in the
state before we can touch the permanent fund. And I
think he knows a little bit about that stuff. One of
the taxes he said that I think would be painless to
collect would be this excise tax on alcohol.
Number 1338
GENE MILLER, President, Juneau Chapter, Mothers Against Drunk
Driving (MADD), came forth and stated:
I am a father who fears for the lives and safety of
children. I cannot control the behaviors of drunk
drivers and their potential to take the lives of my
children or seriously injure them. Others will
testify to numbers; however, as best we can determine
by oblique measurements, a record of drunk driving and
alcohol-related social problems in Alaska rank close
to the top of all the states. We believe cost and
increasing public awareness [are] powerful means to
[lowering] the risk to our children. Sometimes a tax
versus a user fee blurs, such as we know persons who
drink alcohol in Alaska pay only a small portion of
the total cost of alcohol-related problems.
We believe people who drink should bear a larger share
of the true cost of alcohol consumption in Alaska.
Some in the industry fear loss of livelihood; however,
some countries of the industrialized nations
promulgate strict laws such as zero tolerance for
drunk driving with no harmful loss of jobs in the
alcohol industry. Persons adjust their behaviors such
as automatically designating a nondrinking driver when
attending a party or taking public transportation.
We also know that underage drinkers are sensitive to
price and that increasing the price of alcohol in
Alaska can lead in a reduction in underage drinking.
I urge legislators to support an increase in the
alcohol excise tax. It's good public policy and will
take courageous leadership. I urge the alcohol
industry to support this effort as well. It's the
responsible thing to do, and will, I believe, in the
long run preserve jobs.
Number 1182
CHIP DUGGAN, Owner, Duggan's Waterfront Pub, testified via
teleconference. He stated that he agrees that drunk driving is
out of hand; however, it is repeat offenders. He said he
doesn't think this tax is going to take care of that problem,
and will put a lot of people out of business.
REPRESENTATIVE HALCRO asked Mr. Duggan whether he has a drink
price menu.
MR. DUGGAN answered no.
ANNETTE CRAIG, Operations Manager, Don Jose's, Inc., testified
via teleconference. She stated:
My concern with this is that I don't believe that at
this time we can legislate conscientious drinking. I
also don't think you can legislate community
awareness. According to the statute, you cannot
specify which tax will be used [or] that this tax will
be specifically for alcohol reformation.
I believe that the taxation will put a burden on the
buyers and the business owners, not the alcoholic.
And additionally, the potential exists that small-
business owners will be required to reduce staff in
order to meet the increased cost, and perhaps go out
of business altogether. I also do not believe that
the legislators have been unable to [enact] adequate
statutes that keep the alcoholic off the road or out
of the bar or the liquor store.
A 10-cents-per-drink [tax] is deceptive and does not
reflect the true cost to the supplier, the bar owner,
or the liquor storeowner. The government does not
have the right to the conscience of the public. We've
seen the failings of this way too often.
I also find that this tax is too broad, that there's
nothing that specifically states how this tax is going
to be used in order to meet ... the specific topics
that have been raised today - and specifically citing
Section 1(c)[(2)], presently [in] the Kenai Peninsula
Borough we pay a 5.5 percent tax on all sales. And
what I can see from the way that this House bill is
written ... this appears to be a double taxation. I
also don't see that this would prohibit our borough
from increasing the tax on our alcohol.
Number 0978
CHAIR MURKOWSKI remarked, in response to Ms. Craig's concern
with Section 1, that right now the statutes are such that if
there is no existing sales tax within a municipality, the
municipality is not free to impose an alcohol tax. Section 1
eliminates that prohibition; therefore, that tax is already in
place on the Kenai Peninsula.
REPRESENTATIVE HALCRO asked Ms. Craig whether his bar has a
drink price menu.
MS. CRAIG answered yes.
KAREN BERGER, Owner, Homer Brewing Company, testified via
teleconference in opposition to HB 225. She stated:
The proposed increase hits Alaska beer taxation nearly
53 percent higher than any other state. And I don't
feel this is a fair tax increase, and it lends itself
more toward prohibitionism. Educating consumers and
the training of servers, something that this industry
is proactively doing now, will have a greater impact
[on] the problem at hand, rather than a tax that
cannot be designated by the state.
A fair and equitable tax increase is acceptable if, in
fact, the revenues would go toward programs related to
the problem. As a manufacturer in-state, I pay much
higher production costs competing "pricewise" with
Outside breweries who challenge enough. Consumers
will now see such a significant price increase, their
decision will be based on a lesser Outside product,
rather than supporting our local manufacturers here in
the state.
REPRESENTATIVE CRAWFORD asked Ms. Berger whether she thinks
enough is being done today in alcohol treatment, education, and
prevention programs.
MS. BERGER responded that she doesn't know how to answer that
because it is not something she deals with on a daily basis.
Number 0812
ALEX FLYUM, Chairman, House Management Committee, Homer Elks
Lodge 2127, testified via teleconference. He stated that he
thinks the tax being asked for is unfair. He remarked that he
doesn't think there have been enough studies done on this, and
there should be more input from the general people who have
[liquor] licenses and are managers. He said he doesn't see a
problem [at the Elks Lodge]; also, he noted, there is a price
menu, as well as a cab that takes people home if they have drunk
too much.
REPRESENTATIVE CRAWFORD asked Mr. Flyum whom he thinks this tax
will be unfair to.
MR. FLYUM responded that he thinks it will be unfair to the
entities that have the licenses and to the people who want to
enjoy having a glass of wine or bottle of beer. He added that
he thinks the 10 cents a drink is deceiving to people who don't
know what this is all about.
REPRESENTATIVE CRAWFORD asked Mr. Flyum how it will be
deceiving, and how it will cost more than 10 cents a drink. In
addition, he asked Mr. Flyum whether he thinks enough is being
done today for alcohol treatment and prevention and for
education relating to alcohol abuse.
MR. FLYUM responded that the legislature should say that the
taxes would be raised up to $13 a case, rather than trying to
say it's only ten cents a drink.
REPRESENTATIVE CRAWFORD remarked that he was under the
impression that it would be $2.40 per case, not $13. He asked
Mr. Flyum whether he could explain that.
Number 0527
MR. FLYUM referred to a chart he had and responded that a 10-
cents-a-drink increase would be $5.60 [for a case of liquor].
The proposed tax increase would raise it up $12.80, which would
raise the price of liquor up to $18.40 a gallon.
CHAIR MURKOWSKI remarked that the proposed statute is very clear
in suggesting [increases of] beer from 35 cents a gallon to
$1.42 a gallon, wine from 85 cents to $3.41, and spirits from
$4.60 to $18.40. This, she said, is all in gallons, which most
people don't relate to; therefore, [the committee] is putting it
in terms the average consumer can relate to by using the dime-a-
drink reference.
REPRESENTATIVE ROKEBERG commented that he objects to Chair
Murkowski's reason for characterizing [the increase] as a dime a
drink, because it is a marketing tool.
REPRESENTATIVE HALCRO asked Mr. Flyum whether he thinks the
alcohol tax should be raised at all.
MR. FLYUM responded that he could see a nominal raise.
REPRESENTATIVE HALCRO asked Mr. Flyum what he thinks "nominal"
would be.
MR. FLYUM replied, "Right now, we're being overtaxed. President
Bush is trying to give us back some of our money and then we
turn around up here and [you are] going to take more money." He
remarked that he doesn't think [the tax] should be raised by 228
percent. He indicated he didn't think there would be much of a
problem with the industry's going along with a 10 or 15 percent
raise.
Number 0199
JULIE SERSTAD, Director, Public Nursing, Norton Sound Health
Corporation, testified via teleconference. She stated:
I urge all of you to support the bill, for several
reasons. As you are aware, Alaska has the highest
alcohol-related death rate in the country - in fact,
twice the national rate. We also have the highest
instance of fetal alcohol syndrome - four times the
national average.
As a public health nurse and as the director of the
program for Norton Sound, we deal mostly in our
practice with children, and almost on a daily basis
have dealt with kids with fetal alcohol syndrome. We
know, too, in a survey that we did last year of our
prenatal mothers [that] 25 percent of those admitted
to using alcohol during their pregnancy, which is a
frightening amount. Alcohol is not an isolated public
health issue. It contributes to child abuse, as
people have testified, domestic violence, the spread
of sexually transmitted diseases, the spread of TB
[tuberculosis] - and we have one of the highest
incidences of TB in the state of Alaska - and other
medical diseases.
As you can see from the facts that Representative
Murkowski has put together, we in the Bush ... are
number one for alcohol dependence. It is not a figure
that we're proud of, and it's one that we would like
to change. This tax could help provide important
revenue for the treatment of alcoholism, which has the
potential to affect several areas of the public's
health. We urge you to support House Bill 225 and
make a commitment toward the protection of your youth
and the public's health.
Last year ... for public health week ... [we] asked
the youth in our community to write an essay about
taking care of the community. ... One of the issues
that they pointed out was the fact that we have in our
community, on Front Street, [a] high proportion of
inebriated folks along the street. One of the tasks
that they asked that public health address was
cleaning up Front Street.
Tape 01-52, SIDE A
Number 0047
TONY KRIER testified via teleconference as a business owner. He
said he knows there is a problem with liquor; however, kids
think nothing of paying $40 for an 18-pack of beer - money is of
no consequence to them. He suggested there needs to be some way
to keep the kids from buying it.
REPRESENTATIVE HALCRO asked Mr. Krier whether he has been in the
bar business for nine months.
MR. KRIER answered yes, and said he has lived in Nome for 35
years and has been in the state since 1943. He noted that
liquor has not caused any problems to his family, but he still
thinks it is too lax regarding how a package [of alcohol] can
get into the front seat of a car after the person has been
drinking.
REPRESENTATIVE HALCRO asked Mr. Krier whether he would be in
favor of additional resources for enforcement.
MR. KRIER responded yes.
REPRESENTATIVE HALCRO said studies show the best way to attack
underage drinking is through price sensitivity measures, meaning
raising the tax. He asked Mr. Krier whether he would support
that.
MR. KRIER answered yes.
REPRESENTATIVE ROKEBERG remarked that if kids will pay up to $40
for a case of beer and if a bottle of vodka goes for $80 in the
Yukon-Kuskokwim delta, then there is no elasticity for the price
of liquor.
Number 0403
JOHANNA BALES, Revenue Auditor, Department of Revenue, came
forth and explained the preparation of the fiscal note. She
stated that the increase in the tax would cause the need for
additional enforcement of the tax, and [the Department of
Revenue] is requesting an additional revenue auditor to handle
that.
CHAIR MURKOWSKI asked whether the excise tax would be imposed on
29 wholesalers in the state.
MS. BALES responded that right now there are about 25 taxpayers
in the state.
CHAIR MURKOWSKI asked Ms. Bales why there would need to be
increased enforcement.
MS. BALES answered that when the cigarette tax increased there
were complaints of bootlegging and additional cigarettes coming
in from other states that had other state tax stamps. She said
[the Department of Revenue] has spent an additional amount of
follow up time educating the public and checking invoices.
Number 0577
BRETT FRIED, Economist, Tax Division, Department of Revenue,
came forth and addressed the contents of the fiscal note in
terms of revenue. He stated that for fiscal year (FY) 2002,
[the Department of Revenue] is estimating that the revenue
increase will be from $22.5 million to $24.2 million. In FY
2003 through FY 2007 [the increase] will be from about $28.2
million to $30.2 million per year.
CHAIR MURKOWSKI stated that the previous estimates were $33
million to $34 million. She asked Mr. Fried whether he could
explain the difference.
MR. FRIED responded that if the gallons for FY 2001 were
multiplied by the increase in the tax rate, the result would be
about $33 million. [The Department of Revenue] used so-called
elasticity measures, the percent change in quantity with the
percent change in price. Essentially, consumption responds to a
price increase. That was taken from a report that was prepared
for the congressional budget office. He stated that it resulted
in beer consumption dropping from 3 percent to 8 percent, wine
[consumption] dropping from 11 percent to 15 percent, and liquor
consumption dropping from 7 percent to 11 percent.
Number 0759
REPRESENTATIVE HALCRO asked Mr. Fried what currently is taken in
through the alcohol tax.
MR. FRIED answered that from FY 1988 through 1998 it was about
$12 million a year, and then in FY 2000 it was $12.7 million.
The department believes FY 2001 will bring in $12.3 million.
REPRESENTATIVE ROKEBERG asked what the decrease would be
attributed to.
MR. FRIED remarked that the decrease occurs mostly in beer, and
[the increase in FY 2000] may have been that because of the
millennium, since there was a higher consumption of beer. In
response to a further question, he said the first year of the
revenue increase is lower because [the department] assumed the
stockpiling effect of about 20 percent of the increase. For
cigarettes, he noted, approximately 200 million cigarettes were
stockpiled, which was about $10 million in total revenue.
REPRESENTATIVE CRAWFORD asked Mr. Fried what the total amount of
alcohol sold in the state is.
MR. FRIED responded that he doesn't have a dollar figure.
ANDY SWANSTEN, Operations Director, Gastineau Human Services
Corporation, came forth and stated that he is in correction and
rehabilitation by trade and is also a consumer of alcoholic
beverages. Passing a tax, he said, is not going to stop drunk
driving or cause domestic violence to disappear. Alcohol is
part of the social fabric of this state and of this country.
There needs to be additional funding for enforcement,
prevention, and treatment, which is what this us really about.
MR. SWANSTEN shared that Ladd Macaulay was a co-worker of his
wife's and that Martin Richard was his wife's supervisor. Mr.
Carlson, he said, was a professional colleague of his father,
and the individual who killed Mr. Carlson ended up in one of the
[Gastineau Human Service's] programs pending his trial. He
commented that this is truly a user fee and added, "If you don't
want to pay the tax, don't buy the alcohol."
Number 1120
GREG PEASE, Executive Director, Gastineau Human Services
Corporation, came forth and stated that on a national level many
organizations are now referring to [alcohol] as "alcohol and
other drugs" so that people do not misconstrue the idea that
alcohol is not a drug. After many research studies in prisons
across the country, it has been shown that much of the violent
behavior by violent offenders was committed while on alcohol
alone. He stated:
Gastineau Human Services was the first "alcohol and
other drug" treatment program in the state of Alaska,
founded in 1965 during the Egan Administration. We
also started the first community residential center
for the Department of Corrections in 1983.
I serve on a number of national and international
committees and boards for a number of organizations,
three in Alaska: the Alaska Coalition on Housing and
Homelessness, the Alaska Substance Abuse Director's
Association, and I served on the Alaska Criminal
Justice Assessment Commission or the CJAC - the
alcohol committee and the "decriminalization of the
mentally ill" subcommittees. This commission was made
up of private members, public members, private
business people, attorneys, judges, commissioners,
victims, members of the legislature - both sides of
the aisle, both chambers. The recommendations in the
final report to this body were researched and
rationally debated, and the message is clear, very
clear: alcohol is a primary or contributing factor in
80 to 95 percent of all criminal offenses committed in
Alaska. And the percentages are even higher among
Alaskan Natives: 97 percent.
Almost every state departmental budget is affected by
the abuse of alcohol. The cost of this abuse - the
majority borne by non-abusing Alaskans who pay
increased insurance, medical costs, alcohol-related
accidents - it's close to $250 million, as we heard
today. Every year private businesses, like the ones
who sell the product, are among those affected as
well, in lost employee time at work and employee
turnover.
Since little of the cost of alcohol abuse is offset
through the collection of the alcohol-related
revenues, [which] we just heard were around $12.3
million, the first recommendation of the CJAC report
was to increase the statewide excise tax on alcohol.
The second was to allow municipalities to do the same.
The cost of incarceration, we all know, is horrendous.
The recent Newsweek article on addictions pointed out
that we, as a state, will never be able to incarcerate
our way out of the problem of addiction. The movement
nationwide is prevention and treatment. [Proposition]
36 in California [and] a number of propositions in
Washington State, among other states, are now coming
forward for treatment over incarceration. I applaud
the therapeutic court bill, although the research has
been around for over a decade that drug courts do
work. They should be implemented right now in every
community in the state.
Treatment works and has reduced the cost of alcohol
abuse significantly. For example, one year after
treatment, recidivism or rearrest had decreased at the
following rates: in Ohio, 90 percent; Minnesota, 90
percent; Hawaii, 87 percent; Florida, 82 percent;
Colorado, 80 percent; Texas, 80 percent; Maine, 79
percent; California 60 percent. [There were] savings
in the criminal justice system, safer communities - on
which most of you probably ran in your campaigns - and
... few victims of crime and aberrant behavior.
Oregon saved $83.1 million in reduced cost over three
years. Minnesota saved $28 million and recovered 67
percent of its investment in treatment. And after
only six months, Iowa saved $87 million from reduction
in criminal behavior.
You are the stewards of our money, as it's been
pointed out, so it's really [a] "pay now or pay later"
proposition, and the economic facts speak for
themselves - cost savings. As a treatment
professional and criminologist, I'm here to remind you
that the outcome measurements and research are in.
The empirical data is irrefutable.
Raising taxes reduces consumption and thus those
problems associated with over-consumption and abuse.
Everyone saves not only money but also families and
friends. Ladd Macaulay was my friend as well. ...
It's about better business. It's about better public
business.
For 15 years I have seen firsthand the ravages of
alcohol abuse. And like many other states, our state
spends 4 cents out of every dollar on prevention and
treatment, and the remaining 96 cents on mopping up
the mess. It's time to move forward with as many
resource options as possible, this being one. I'll
end my testimony with a quote by an Alaska state
trooper during the CJAC meetings, who described to me
the problem of alcohol in rural Alaska as "the river
of death." It does not get any more serious than
that.
Number 1477
REPRESENTATIVE ROKEBERG asked Mr. Pease whether he supports
mandatory treatment for incarcerated people.
MR. PEASE answered yes, and stated that it has been proven that
mandatory treatment is just as effective as voluntary treatment.
REPRESENTATIVE ROKEBERG asked what the costs would be.
MR. PEASE responded that the cost at Lemon Creek Correctional
Center is $48,000 a year for the treatment program.
REPRESENTATIVE ROKEBERG asked how many people are in the
program.
MR. PEASE answered that right now there are more than 60.
REPRESENTATIVE ROKEBERG related his understanding that the ASAP
(Alcohol Safety Action Program) program is underfunded right
now. He asked whether there is a problem in Juneau with the
reimbursement from the Department of Corrections.
MR. PEASE responded that the contracts have changed
significantly. The [counselor] is not paid for time off and can
only work so many hours. He said the program should really have
two counselors.
Number 1574
REPRESENTATIVE ROKEBERG asked how long the program lasts and
whether it varies with the individual.
MR. PEASE replied that it varies in the individual's assessment.
It should work, he said, where someone who is six months short
comes out through a community residential center and the
treatment follows right along. He remarked that the "bootleg"
programs are only effective when they have a treatment component
combined. Most of that treatment occurs after the person has
left the "bootleg" and is in the community.
REPRESENTATIVE ROKEBERG asked whether six months is the minimum
target length.
MR. PEASE answered yes.
REPRESENTATIVE ROKEBERG expressed interest in seeing additional
information on claims from other states about their savings.
Number 1650
KEVIN RITCHIE, Executive Director, Alaska Municipal League, came
forth and stated that very often in municipal government, and in
tax issues in general, a relationship between the tax and the
service provider is created. Certainly, he said, in the area of
alcohol abuse there is a direct relationship between the sale of
alcohol and the requirement of government services.
MR. RITCHIE explained that on a local level, the bill allows
municipalities to increase local sales tax on alcohol by a vote;
right now, that is the only commodity for which that special
restriction is in place. For example, hotel rooms commonly have
a higher rate of sales tax than the general sales tax, which is
done through a vote of the people. He pointed out that a
section of state law currently precludes that from being done at
a local level and prevents local voters from voting on a higher
sales tax for alcohol or imposition of a sales tax at all, if
none is available in the local community. This bill would
remove that restriction and allow local voters to decide for
their community whether to raise the property tax or the alcohol
tax, or to use some combination to pay for required services.
REPRESENTATIVE ROKEBERG asked whether Fairbanks and Anchorage
are the only communities that don't have a sales tax.
MR. RITCHIE responded that 98 communities have sales tax, or 161
cities and boroughs together. Of the larger communities,
[Fairbanks and Anchorage] are the two that don't.
REPRESENTATIVE ROKEBERG asked Mr. Ritchie whether, according to
[Version L], there could be a sales tax over and above the
normal sales tax.
MR. RITCHIE answered yes.
REPRESENTATIVE ROKEBERG asked Mr. Ritchie whether he is aware
that the Municipality of Anchorage voted to reject an alcohol
sales tax.
MR. RITCHIE responded that the municipality has rejected several
sales tax issues.
Number 1795
CINDY CASHEN, Mothers Against Drunk Driving (MADD), came forth
and stated that she is a victim of drunk driving. She said:
MADD strongly supports House Bill 225. Without a
decent excise tax increase, more Alaskans will be
killed. When programs go unfunded, treatment centers
have a waiting list so long they ... quit taking
names, laws on the books are not enforced, and alcohol
abuse education is not taught in our schools. ... We
will have more Alaskans killed by drunk driving and
underage drinking. It's that simple. When we don't
put money where it's needed, then the problem grows.
MADD is concerned over the fact [that] Alaska does not
have enough ABC [Alcohol Beverage Control] officers to
enforce the laws passed concerning selling to minors
and inebriated persons. Five officers covering the
state of Alaska are not enough.
The person who killed my father bought from a liquor
store while obviously intoxicated, according to
witnesses. Had there been enough ABC officers in the
state, that store would probably had not felt as
comfortable selling to someone who staggered in
reeking of alcohol. MADD is concerned over the fact
[that] Alaska does not have enough state troopers.
The person who killed my father felt comfortable
becoming impaired, buying more alcohol, and drinking
it for almost two hours on the Seward Highway. Had
there been a sufficient number of state troopers, the
drunk driver might not have felt as confident doing
this, or might have been apprehended before he took
the lives of my father and Martin Richards.
Alaskans need this source of income to protect our
loved ones. Yes, it's a tax, and not everyone
believes in taxing, but alcohol is different. Alcohol
comes with a price tag. It's the real world. Where
there's alcohol, there's abuse. We can't expect the
offender to pay for all the thousands of dollars it
costs the state, because usually the offender doesn't
have that kind of money. Offenders don't just grow
out of trees. They don't wake up one day and decide
they will become alcoholics and drink and drive.
These people were once little kids; they were once
teenagers; they were once at an age where consistent
alcohol abuse education could have made a difference
in their lives.
When a child does not know the dangers of [a] drug,
what is to prevent that child from taking it? We
don't have education programs in our schools
concerning alcohol abuse and the dangers of underage
drinking. And we owe it to our children to provide
what we already know: that underage drinking and
drinking and driving kills. They don't know this, but
they need to, before our children of today become the
drunk drivers of tomorrow. The man who killed my
father could have used that education when he was a
little boy, but it's too late for him now. It's too
late for his family now, and it's too late for me and
my family. MADD encourages this committee to support
this bill.
REPRESENTATIVE KOTT asked Ms. Cashen whether it is the position
of the national MADD organization to support an alcohol tax
increase.
MS. CASHEN answered that it certainly is.
Number 1968
DOROTHY CUNNINGHAM, President, Kenai Cabaret Hotel Restaurant &
Retailer Association (CHARR); Owner, Vagabond (ph), testified
via teleconference. She referred to Section 3, which states,
"(1) malt beverages at the rate of $1.42 [35 CENTS] a gallon or
fraction of a gallon". She asked whether a fraction of a gallon
will cost $1.42 or a fraction of $1.42.
CHAIR MURKOWSKI stated her understanding that it would cost a
fraction of $1.42.
MS. CUNNINGHAM asked where the fees for an alcohol license are
being spent. In addition, she stated:
We all know that there's a problem with underage
drinking. We also know that it's being policed and
enforced in the Kenai area quite heavily. One thing
about ... having more taxes on our product ... [is]
it's also going to lead to theft, simply because if
[minors] can't afford it, they're going to steal it.
It's happened time and time again. ...
I feel this particular tax is highly out of the
ordinary. I don't mind paying a tax. I don't mind
giving a portion of my product money or my profits to
combat alcohol abuse. But I think this will put me
out of business. And in doing that ... it puts all of
my help on the welfare line.
CHAIR MURKOWSKI noted that someone will be able to answer some
of the questions Ms. Cunningham had raised.
Number 2117
REPRESENTATIVE HALCRO asked whether her bar is stand-alone or is
attached to a hotel.
MS. CUNNINGHAM responded that it is a stand-alone bar with a
liquor store.
REPRESENTATIVE HALCRO asked whether there is a price list.
MS. CUNNINGHAM answered that there is.
REPRESENTATIVE ROKEBERG, in response to a question raised by Ms.
Cunningham, stated that almost all of the fees go into the
general fund.
MS. CUNNINGHAM asked whether those fees are figured into the $12
million that comes from alcohol revenues.
REPRESENTATIVE ROKEBERG answered no.
Number 2160
GARY SUPERMAN, Owner, Hunger Hut, testified via teleconference.
He stated:
I plan ... [on] coming up with a group that can get
together and rationally fight what I view as an
irrational proposal. First of all, this is a 300
percent increase on us, the owner-operators of this
section of the industry. Our business is not a large
business; I have a little walk-in liquor store. I was
going through the books this morning, going through
some of the spreadsheets and trying to tie it in with
some of the increases that are being proposed here,
and it's going to make it really tough on us. ... My
wife and I have pretty much put our savings -- I'm 50
years old. We inherited the place from my mother-in-
law. I put several hundred thousand dollars into the
business, built a new motel, and we're just starting
now to climb out of that debt. This is really going
to be put some kind of damper on the plans that we
have for any kind of new expansion. ... I have never
heard of an increase to any industry of this
magnitude. ...
I think most of the rational people in the industry
are not opposed to some type of increase in the
taxation. ... But there is so much pretense that is
wrapped up in this bill that I don't know how you, as
responsible legislators, can actually be forwarding
this. The idea that we are going to somehow legislate
righteousness into society is something that we tried
for a long, long time, and it's not going to happen.
It never has happened, and it never will happen.
People drink [and] there are abusing people. What can
we do about it? I have my own ideas, ... civil
restitution. You people probably aren't aware of
that; you think that we should all be responsible
somehow for everybody. I don't mind being responsible
for some people. And believe me, as a bar owner, I am
responsible.
Number 2278
MR. SUPERMAN continued:
When people walk into my place, I'm totally
responsible for them, because the state says I am. ...
We're responsible because we've been stuck with third-
party liability, which has put our insurance rates
unbelievably high. We cannot serve, legally, anybody
over the BAC of .10. ... By lowering [the] BAC, I
don't know what that going to do, other than put the
onus back on us as the small operators. ...
I also see this bill ... as a revenue-collection
device. ... And it really kind of bothers me, when I
look at the makeup of this committee, which is pretty
much an Anchorage crew, and then I see this piggyback
thing for the municipalities to be able to enable
themselves to go ahead and institute a special tax for
alcohol in their own municipality. ... I'm really
reluctant to become a revenue collector for the state.
There are so many ... propaganda mistakes in the
sponsor statement that I think you've done a
disservice to a lot of the people who have come to the
committee hearing today. One of the things that
really sticks out [for] me here is ... in the sponsor
statement we don't include the tourists that come.
What has happened to them, with all of these figures
that everybody has been touting today? ... We've got
1.4 million visitors. ... We're not factoring those
people in there; that's twice the population we have
in this state. Of course, you do have some qualifier
at the end here of your sponsor statement sheet that
states that we don't have any really good figures on
the tourists coming up here. ... However, you use
their numbers to skew the numbers. As a responsible
business owner, I would go along with a tax increase,
but this is totally irrational, and the impact on
small business owners is going to be extremely
detrimental.
Number 2425
CHRYSTAL SCHOENROCK, Cabaret Hotel Restaurant & Retailer
Association (CHARR); Owner, 4 Lands Bar, testified via
teleconference. She stated that she is shocked [with the
increase], and thinks it is too much. She said this would put
her out of business. As far as a private prison, she said
[people in Nikiski] are not for that. She added that teenagers
are going to get [alcohol] regardless [of the price].
TAPE 01-52, SIDE B
JAMES FITZGERALD, Owner, The Rendezvous, testified via
teleconference in opposition to HB 225. He stated:
I think this tax is totally unfair. You trying to tax
us to ... put money into special-interest groups, and
the money will have to go into individual funds. If
those people need to get more money, they need to go
to Juneau and lobby to get more money. You want to
increase our taxes so high as to put us out of
business. Our business here in Kodiak is down
already. This industry isn't too good, and the
logging is gone. We are not the root of all evil. We
are combating the kids that try to buy alcohol. We
take care of the people who come into our
establishment. We're not the cause of kids in foster
homes. We're not the cause of people that have
problems with prisons. ... We're trying to do the best
that we can. ... You're trying to set morality, and
that's not the way it works.
REPRESENTATIVE HALCRO stated that this committee isn't trying to
legislate morality, but trying to come up with a way to pay for
$250 million in costs that are incurred by the sale of alcohol,
which is a legal product. He asked Mr. Fitzgerald, if [the
legislature] does not tax alcohol to pay for the problems that
alcohol causes in the society, who should pay for it.
MR. FITZGERALD answered, "Everyone in the state."
Number 2357
ANDY LUNDQUIST, Owner, Tony's Bar, testified via teleconference
that he is opposed to this legislation in four different areas.
He stated that he thinks the bill is deceptive and unreasonable.
APRIL SMITH, Manager, B & B Bar, testified via teleconference.
She stated:
I am a manager of a small bar here in town, and we
primarily cater to the fisherman, which everybody
knows the fish industry is not doing very [well]. Our
bar's already feeling the weight of the environment
coming down, and I do not believe that this increase
in taxes is going to help stop some of the crimes that
are going on because of them. I do not believe that
welfare will go down because you tax us more. I do
not believe that drunk driving will go down because
you tax us more. I do not believe that men will stop
beating their wives because you tax us more. I do
believe that there needs to be taxes to pay for these
things, but I also believe that all of us need to
participate in those taxes and not ... target certain
areas.
Number 2231
ELIZABETH STARK, Bartender, Mecca Bar, testified via
teleconference. She stated:
I accept responsibility for my own actions. If I have
a cocktail, I accept the responsibility for making
sure I don't drive home. I do not feel that it is my
responsibility to pay and be penalized for the
irresponsibility of others. Until our representatives
can appropriate the monies they already have available
in a way that actually has a positive effect in
combating the abuse of alcohol, it (indisc.) that the
person who acts responsibly and (indisc) should be
forced to pay more taxes. As for not having a
hardship with the increase, I'm glad that
Representative Murkowski doesn't; however, my
landlord, the electric company, and [the] gas company
are going to have hardships when I can't afford to pay
them due to my future unemployment status.
It's a shame that our representatives can't have more
compassion for the majority of the people that they
represent, since most of them are employees with
service industry, and service is including alcohol.
Since we are rated number one and number two,
depending on which report you read, as the industries
in Alaska serving tourists and locals, I really feel
it's hurting your constituency more than just the
hardcore alcoholics. Besides, the bill ... isn't
about ... taking the money to put toward
rehabilitation. I think it's more a prohibition of
alcohol. If you can take the money and tell us
exactly what you're going to do with it, how are you
going to use it to better people in our communities
and our communities in general? You'd probably get a
lot of more support than just taking it and sticking
it toward the general fund.
Number 2147
BILL MARSH, Manager, Mecca Lounge, testified via teleconference
in opposition to HB 225. He stated:
I believe there has been some research done prior to
the writing of this bill, and a lot of that research
was based on statistical information provided by
different organizations within the state. I believe,
as individuals, if we sat down and we dissected all
the information that was provided to you, we could,
ourselves, find problems within the information that
you are now standing with, such as alcohol abuse. In
the criminal justice system there is a lot of record
keeping concerning alcohol abuse, and not just the
intoxication level, but as to whether or not an
individual had consumed any amount of alcohol. It
could have been ... half a glass of beer. If he had
been contacted by a public safety official, he would
have been listed as been somewhat intoxicated. They
don't list the level of intoxication; they don't view
a BAC investigative report on any of the individuals
that they contact.
So, in essence, we're saying that an individual at
home who's involved in a domestic violence situation -
drinks a half of beer - if an officer is called to his
house, and he is contacted, you can arrest [him and]
he is taken to jail; then the report reflects that
alcohol was involved in that situation, when in
actuality the alcohol may not have ... created that
situation whatsoever.
So I think that if we dissected any of those
informational reports that you are basing some of your
decisions on, we could find a lot of problems in those
areas. We do have a foundation within the state of
Alaska to assist and provide care to people that do
have problems. I think we do a very good job in the
state of Alaska in providing that care. I think our
downfall is in our public safety enforcement areas.
We need more cops on the street. We need more
enforcement abilities, and that comes through funding.
I think the tax ... is going to put a lot of people
out of business. ... I am not opposed to a tax; I am
opposed to this bill as it stands right now.
REPRESENTATIVE ROKEBERG asked Mr. Marsh what kind of a tax
increase he thinks would be reasonable.
MR. MARSH responded that he thinks the tax should be directed at
the state as a whole; this is a public problem.
Number 1944
SUSAN PHIPPS, National Alliance for the Mentally Ill (NAMI)
Juneau, came forth and stated:
I'd like to thank you for keeping your eyes and your
mind and your heart focused on the 10 percent tax in
House Bill 225. Your decision and recommendation is
important to the everyday people in Alaska. I believe
that the revenue generated from a tax like this ...
could increase Alaska's recovery from some of the
effects from alcohol consumption. How? We need more
prevention programs. Susan Alsey (ph), who's a Ph.D.
with University of Alaska, the Department of
Pediatrics and Epidemiology, was the opening speaker
at this year's Southeast Alaska drug and alcohol
conference in Juneau. She stated that it costs 30
times as much for a lifetime of care for a person with
FAS [or] FAE [fetal alcohol effects] when compared to
the costs of the education of birth mother. How can
we spend this money? We need more treatment ...
centers.
NCADD [National Council on Alcoholism and Drug
Dependence] ... statistics show that 300-plus persons
are on the waitlist to get into the rehabs in Alaska.
Why only 300-plus? Because that's the cutoff number;
they don't keep any more. ... And I believe that we
all realize the value of recovery. How, I ask? ...
More funding to enforce laws that are already on the
books, like highway safety patrols and preventing
sales to minors and to inebriated persons. And I
believe one component is to divert people who suffer
from addiction from prison into treatment.
Finally, I ask you to keep the tax high. It hasn't
been raised for many years, since 1983. Now's a good
time to fund the repairs, to pay for the damage, and
to begin to build a healthier, more informed way of
thinking about alcohol. ... As Alaskans here, ... we
are making a statement about our commitment as a state
toward healthy choices, and about our responsibility
to care for one another.
Number 1808
JANE DEMMERT, Executive Director, Alaska Commission on Aging,
came forth in support of HB 225. She stated that the first
resolution that was passed by the commission this year was in
support of an increase in the excise tax for alcohol. She said:
One of the interesting aspects that I have come to
appreciate by the commission, with which I've been
associated for six years, is that while it's made up
of people who are 60 and older, they truly do have a
concern about all generations. And as we all know,
through personal experience, we all are aging, and
we're aging at the same rate. What we understand, and
what the commission has been very concerned about, is
the profound impact of extreme uses of alcohol in
Alaska. This testimony today has discussed and very
dramatically described how profound that impact is.
Of particular significance, I think, is what's
happening to unborn children from the use by their
mothers. There's a lot of research also on the impact
on unborn children by the use by their fathers. We
have had family experience in raising kids who it
would appear have been affected by that kind of use by
their mother, and it is indeed something that all
Alaskans share as an impact. The social costs of our
current situation are very high and very profound.
The second point that I would like to make is that in
looking at this kind of an action, I think the key
factor for our commission is action must happen. We
have so much ground to make up, and we hope that you
will be a part of that solution. And we will support
you in every way we can.
Number 1701
MATT FELIX, Director, National Council on Alcohol and Drug
Abuse, came forth and stated:
In a previous life, I was state director of alcoholism
and drug abuse services in the '80s, and I want to
clear some things up from my past experiences. ... The
committee has heard that the costs to the state are
around $250 million. This figure was cited because it
was included in an annual state plan in 1989. And the
figure ... only includes state department costs:
Medicaid, Medicare, DFYS [Division of Family and Youth
Services], health and social services costs, and
Department of Corrections costs, primarily. It does
not include any private-industry costs; it does not
include any healthcare costs. It does include the
treatment of alcoholism and drug abuse funded by
grants. The figure is 12 years old. At that time, we
estimated the costs conservatively were 15 percent of
the budget. So, if you use that same 15 percent, ...
the 15 percent of $2.4 million budget this year, ...
it would probably be somewhere well over $300 million.
...
This tax is a very mild tax. As you've heard, it
hasn't been raised since 1983; I was part of that
movement as well. The tax is really not a tax in the
sense that it is a specific product tax. It's more or
less a user fee. ... Of course, abstainers will not
pay this tax at all, and a moderate drinker probably
will not feel it. ... Three hundred percent is still
ten pennies. ... Nobody's not going to take a drink
over ten pennies. As a matter of fact, you go to any
town in Alaska and order the same beer in three
different bars you're going to get three different
prices. It's an extremely elastic ... price ratio that
bars use.
Number 1492
DON SKEWIS, President, Cabaret Hotel Restaurant & Retailer
Association (CHARR), testified via teleconference. He stated:
Our industry is the largest private employer in the
state. One out of four of our children start out with
their first job being in our industry. ... CHARR was
the organization that actually voluntarily put up an
alcohol tax. We taxed ourselves in the old days. ...
In 1982, the state was bringing in around $15 million
in alcohol taxes; as of now, we're bringing in about
$12 million. That's with about 60,000 more people
living in Alaska. That would tell me, if we're
consuming less, then something's working. Now this
doesn't include the tourist factor that people are
talking about. ... Also, ... in Anchorage there [are]
30 percent less licenses than there were in those days
when we first instituted that alcohol tax.
I know you're under a lot of pressure from the knee-
jerk reaction from that terrible accident. ... The
people that cause these accidents have six DWIs
[driving while intoxicated] and have no driver's
licenses. Raising the alcohol tax is not going to
keep people like that off the road. ...
Fifteen years ago, this industry proposed something to
put mandatory insurance on vehicles, which means if
you didn't have a driver's license, you couldn't
possibly insure it. If you ... dropped your
insurance, ... they come and get the license plates
off your car, and it costs you a lot to get them back
on. ... If you let somebody else drive your car
without a driver's license, you could lose your
vehicle after a second offense on that. So, we have
thought about this ... in this industry for a long
time. ...
We've got quite a week coming at us. We have shorter-
hour bills at us. They want to make us the police by
trying to check every person for an ID
[identification]. ... On top of all that, they want a
300 percent or a 600 percent tax - all this because of
those accidents, not to mention that this industry has
just got a big raise in the workman's [compensation]
and they are trying to raise our unemployment taxes.
A lot of us are very small operators. ... I've been in
the business for 30 years, and I have never had a
violation of any kind. I've had my own business for
almost 25 years. I've been going down to Juneau for
almost 25 years and fighting these different things
and talking about different situations. But 90
percent ... of our operators operate responsibly; ...
90 percent of our consumers consume alcohol
responsibly, but yet we're going to pass a law to tax
the responsible drinkers. ...
This last election in Anchorage was really disgusting
- 19 percent voter turnout. ... There was an advisory
vote on ... [an] alcohol tax. 75 percent of the
people in this town wanted that - that's amazing.
Let's look how many voted for the 2 percent sales tax.
Now, 80 percent of the people in Anchorage, especially
because we have no sales tax and because of permanent
fund dividends, pay no taxes whatsoever. Yet our
population that's over 65 nationally, they're not
going to pay for a sales tax, because they pay no
property taxes at all.
Number 1178
TIM SCHRAGE testified via teleconference in opposition to HB
225. He stated:
As a lifelong Alaskan, a former Department of Health &
Human Services counselor, and a business owner with
four package liquor licenses, I understand the
author's intent. But it will do nothing to solve the
problem of hardcore [drinkers], multiple DWI
offenders, repeat domestic violence offenders, or
public inebriates. What this type of bill will do is
punish the average Alaskan who chooses to drink in a
responsible manner. I should suggest that before you
make a decision on this issue, you read further the
history of the current excise tax. The amount Alaska
has received annually has not gone up significantly
since 1984. The proponents of this bill would like
you to believe it's because taxes haven't increased.
The reality is, per capita, alcohol consumption in
Alaska has gone down dramatically despite the
population increasing by nearly 100,000 residents and
over one million tourists a year coming to visit our
state.
Alaska has one of the most heavily taxed beverage
industries in the nation. I fear that a few of our
representatives ... want to change our great state
from being known as the Last Frontier to the "land of
excessive taxes." Adding an additional $31 to an
average case of spirits is excessive. Alcohol excise
taxes have not increased in 17 years, yet Alaska
maintains the fifth-highest liquor tax in the nation.
If you believe that all taxes need to be increased, it
should be a reasonable amount that's part of a
comprehensive fiscal plan. People are telling you,
day in and day out, "We've got a fiscal gap; let's
solve it, but let's have a plan for it." [Increasing]
taxes by over 300 percent, targeting specific
industries, and allowing municipalities to
individually tax alcohol is not responsible or
reasonable government.
There is no need to impose further taxes on the
average Alaskan until current alcohol programs are
quantitatively evaluated, based on their fiscal note
and, of course, most importantly, on their
effectiveness. We're funding programs today that in
many cases don't work. Before we increase taxes to
fund new ones, let's weed out the programs that aren't
measuring up to the tax.
And I'd like to leave you with one little quote ...
from the National Institute on Alcohol Abuse and
Alcoholism, the government's leading agency on alcohol
issues, [which] reported in the October 1996 issue of
Alcohol Alert that research suggests that the heaviest
drinking 5 percent of drinkers do not reduce their
consumption considerably in response to price
increases, unlike drinkers who consume on a lot lower
level. This type of legislation will not solve the
problem you're trying to get out.
Number 0990
REPRESENTATIVE ROKEBERG asked Mr. Schrage about the $31 per case
of spirits he mentioned.
MR. SCHRAGE responded that it is what the tax would be increased
to.
REPRESENTATIVE ROKEBERG asked whether that is for a [case] of 12
bottles of fifths.
MR. SCHRAGE answered yes.
Number 0943
JAMES CRARY testified via teleconference in support of HB 225.
He stated:
I was a prosecutor for the Municipality of Anchorage
in 1983 and '84. Eighty-five percent of what I did
was alcohol-related. We're talking about DWIs,
domestic violence, assaults, disorderly conducts. And
I can tell you that we have about 1,500 DWIs in this
town every year, and they are not chronic alcoholics.
I remember one case in particular, it was an engineer,
he had a good job, he drank too much, and he almost
killed a kid on the curb. ... Alcohol is a drug, and
of course the alcohol industry does not market it as a
drug, but that's exactly what it is. It affects your
coordination, it affects your memory, and it affects
your judgment. The more you consume, the less
judgment you have. Unfortunately, when people consume
too much alcohol, too often the results are [that]
innocent people suffer.
I monitor the daily news and just see what kind of
alcohol effects are happening. And in the last year
there has been the 12- and 13-year-old boys that got
killed by the drunk driver down by Portage; there was
a three-month-old child in a village that got shot in
his father's arms by an intoxicated neighbor. Those
kids were nothing but innocent, and they got killed by
someone's abuse of alcohol. I talked to Sergeant Bill
Richardson of the Anchorage Police Department today.
He's been on the force for 20 years. ... He said 85
percent of what he does is alcohol-related. ... I
started by pushing for [a] 25-cents-a-drink increase.
I went down to 20 cents, and now it's down to an
additional dime. I urge you strongly, please, do not
go any lower than an additional dime. Don't raise it
to a dime; raise it by a dime. ...
The medical community defines a "moderate drinker."
... For a woman, it's one drink per day; for a man,
it's two drinks per day. So this tax would mean an
additional $73 per year for a man, and an additional
$36.50 for a woman.
Let's put some perspective on this. ... We're here
today for one reason, and that's because if you
increase the price, you're going to decrease
consumption. If you decrease consumption, we're going
to benefit because you're going to also decrease
alcohol abuse. But if you decrease consumption, that
means the alcohol industry is going to sell less
alcohol [and] their profits are going to be impacted.
You heard from Mr. Fried, the economist, and he was
saying that the elasticity was, I think, from 3 to 11
percent. That surprised me; I didn't think it would
be that high. But even if it were 1 or 2 percent,
we're talking millions of dollars, and that's why the
alcohol people are here - it's their bottom line.
I'm here because I am sick and tired of alcohol abuse
ruining Alaska. I would like to hear someone come and
testify today, or anytime, and tell me how Alaska will
be a better place if less alcohol is consumed. No one
has ever testified. None of the alcohol people have
ever said that, because they can't.
Let's put some more perspective on this. We're
talking a 300 percent increase. We're also talking
right now 3 and 1/3 cents on a bottle of beer, 3.5
cents on a five-ounce glass of wine, and 4.4 cents on
a shot of whiskey. That's a testimony to the
effectiveness of the alcohol industry, that they've
managed for 18 years to keep the legislature from
increasing that tax.
When you have something so abysmally low, you can
"play" statistics. Statistics are a wonderful thing
sometimes, but they can be abused, just like alcohol.
And this is abusive, when you say it's [a] 300 percent
increase. If alcohol kept going up the way it was in
1961, the tax would be about 47 cents a drink. We're
asking for 10 cents. We have a quarter billion
dollars in the state going to deal with alcohol abuse.
If you wanted to wipe that out entirely, we'd be
talking 80 cents a drink. Ten cents is imminently
reasonable.
Finally, these people are all talking, "Everyone's
going to lose their jobs." ... The only economic
study I know was done by Scott Goldman (ph). And he
said ... you wouldn't lose any jobs. And that's true,
because if you lose 1 or 2 percent of your sales,
you're still going to have to have the same sales
force. And as far as people stopping drinking, like I
said, moderate drinkers, this is going to have zero
impact. If you don't drink, you're not going to pay.
Number 0514
REPRESENTATIVE ROKEBERG asked Mr. Crary what his margin of loss
was in 1995.
MR. CRARY responded that it was about 1 percent. He stated:
The first year we did that, the alcohol industry was
kind of caught flat-footed; the second year they were
not. ... Anheuser-Busch, Coors, they all brought in
thousands of dollars. They were all from the Outside,
and they were all able to buy enough 30-second ads
that they were able to beat us. We did not have the
wherewithal to combat their publicity, but we
certainly had the public support. And I think that's
evident when you can get (indisc.) 15 to 1 and still
pull 49 percent.
REPRESENTATIVE ROKEBERG asked whether, subsequent to those
elections, the Municipality of Anchorage had voted to increase
to a super majority, at 60 percent, [the requirement] for the
adoption of any future sales taxes.
MR. CRARY affirmed that. He remarked that the people behind
that initiative were the "alcohol people" as well as merchants
who had sold higher-priced goods.
Number 0360
KATHRYN BOGGS-GRAY, Coordinator, Economic Intervention Project,
Akeela, Inc, testified via teleconference. She stated:
The primary mission of this project is to evaluate the
available research on the impact that an alcohol tax
can have toward reducing and delaying drinking by
Alaska's youth, and providing education and
information to the public about these findings. With
over 75 percent of Alaska's students reporting the use
of alcohol, our need to address this issue is urgent.
According to the Centers [for] Disease Control [and
Prevention], alcohol is a factor in three leading
causes of death among young people: accidents,
homicides, and suicides. And unlike tobacco, which
kills its users in middle age and later, alcohol is a
drug that actually kills thousands of young people a
year, more than all illicit drugs combined.
Today, numerous studies have been and are being
conducted to evaluate the impact of tax increases on
reducing alcohol use by young people. The vast
majority of these findings make it clear that youth
and young adults reduce their drinking in response to
price increases more that adults in general, which is
especially important given that youth experience [a]
disproportionate share of alcohol-related problems.
In a study, for example, in 1984 called "The Effects
of Alcohol Price Policy on Youth," researchers found
that a beer tax that offsets the effects of inflation
[and] raises the tax on beer equal to the tax on
distilled spirits would reduce the number of underage
drinkers who drink frequently by 32 percent, and
reduce the number of underage drinkers who [drink]
fairly frequently by 24 percent. The result of this
study also indicates that raising the taxes to make
alcohol more expensive can be more effective in
deterring youthful drinking than raising the minimum
drinking age.
In a very recent study released regarding youth
drinking patterns, researchers again found that the
effects of a beer excise tax [are] highly significant,
and that a mere dollar increase per case of beer would
reduce youth drinking prevalence by 2 percent.
Despite earlier research to the contrary, new studies
also show that doubling the tax on beer would reduce
the probability of young people using alcohol by 3.2
percent, and reduce their probability of using
marijuana by 11.4 percent. There is also clear
evidence that there [are] direct correlations between
increased alcohol taxes and decreased rates of
sexually transmitted diseases among young people,
teenage pregnancies, ... school dropout rates, and
suicide rates.
In providing this information [through] the community
council, PTAs [Parent Teacher Associations], and other
service groups throughout the state, it's clear that
the people of Alaska take our biggest youth drug
problem seriously, and they're prepared to support tax
measures aimed at addressing it.
TAPE 01-53, SIDE A
Number 0058
OBED NELSON testified via teleconference in support of HB 225.
He remarked that there has been testimony from around the state
on the part of the Industry. He said these people are scared
this will have some adverse effects on their businesses; the
same kind of "the sky is falling" rhetoric was heard when the
bar hours were going to be shortened in Anchorage. However,
businesses were able to cut down on overhead expenses.
MR. NELSON said he believes the reality is that the local
retailers will pass on the increases to their customers and will
not be hurt, although with the elasticity factored in, the
Seattle wholesalers will take a hit. He added that his purpose
for supporting this tax is to reduce consumption. He stated:
When you can buy alcohol cheaper than a gallon of milk
and ... bottled water, something is wrong with our
public policy. We all know that alcohol is the number
one economic drain to the State of Alaska in terms of
problems. I don't have any problem with you as a
committee advocating for us to be the number one state
in the nation in terms of the collection of this user
fee on alcohol.
Number 0329
JEFF BEALLES, Program Director, Catholic Social Services,
Brother Francis Shelter, testified via teleconference in support
of HB 225. He stated:
I'm immersed daily in the devastating impact that
alcohol has on our community. Folks who reach
absolutely rock bottom inevitably come to the doors of
the shelter that I operate. A lot of the things ...
have already been talked about, as far as the
devastating impacts of alcohol. The only thing that I
would add to that is organic brain damage for a lot of
our folks that have been drinking for years.
On another thing, we talked about price influencing
consumption, and I just want to offer a real example
of that being that case. We had, until quite
recently, a situation where there was ...
irresponsible - bordering on predatory - pricing of
alcohol in this community. The local big grocery
store chains that own the liquor stores would
advertise their bottom-of-the-barrel vodka for $4.69
for a fifth of vodka. And we were experiencing peaks
... in public inebriate traffic, in folks passing out
or succumbing to alcohol poisoning or folks in really
tough shape, [and an] increase in calls to community
service patrol and APD [Anchorage Police Department].
We'd notice at varying times of the month this
phenomenon was happening. And then we finally caught
on and realized that it had to do with when these
sales would come on.
When the $4.69 bottles of ... vodka would go on sale,
we had to increase our staff, we were calling police
to the shelter left and right, [and] we had to use
community service patrol. It was only ... recently
when the actions of a community council in town, along
with some social providers, finally got to these
people and they stopped doing that, and we've seen a
little bit of stabilization.
REPRESENTATIVE HALCRO asked Mr. Bealles whether he was referring
to the North Star Community Council and the liquor store that
used to be located on A Street.
MR. BEALLES answered yes, [the North Star Community Council] was
instrumental in getting the store to change the prices on
certain beverages.
Number 0573
TRICIA LILLIBRIDGE, Emergency Nurse, Providence Hospital; Injury
Prevention Educator, Alaska Injury Prevention Center, testified
via teleconference. She stated:
I am here to address several issues that have already
been spoken about, but primarily to talk about the
impacts of what we are seeing in our community as a
result of alcohol behavior. First of all, the problem
is not restricted to hardcore drinkers. ... The data
that I can share with you right now comes from our
Alaska (indisc.) registry. 25 percent of the people
hospitalized with injuries have suspected or verified
alcohol impairments. And this is not restricted to
the problem drinker; these can be individuals who have
gone out, partied, [and] had some kind of an injury
event on the way home. They are hospitalized because
of those injuries, [and] they have disabilities,
probably .. at least short-term, if not long-term.
Thirty-one percent of those who had injuries that were
hospitalized were billed to Medicaid or they were
uninsured; therefore, someone is paying the bill for
their medical care.
In Anchorage one in five ambulance runs are alcohol-
related. And patients are admitted anywhere from 0
percent alcohol intoxication to over .4 percent.
Who's coming in with 0 percent? The victims of the
people who are driving drunk. Now, when I talk about
victims, I want you to understand that you or your
family or the people you care about are at risk of
becoming a patient in my emergency room because of
someone else's responsible or irresponsible behavior.
The issue is that you don't have to have a whole lot
of alcohol to have a car crash. Drivers, many times,
are first-offense DWIs. They're shocked that they've
caused a crash, because they think they're able to
drive home.
Number 0699
MS. LILLIBRIDGE continued, stating:
The other issue is that my supervisor, or any other
hospital supervisor, may call you or any other Alaskan
to inform you that your daughter, your son, your
husband, or your wife is critically injured or dead
... because of an alcohol-related event. The families
are shattered. ...
I would also like to correct the data that the
gentleman gave you who was the third speaker on this
hearing. He told you that alcohol crashes were
decreasing in Alaska. The Alaska Traffic Accident
Report in 1999 states that 44 percent of the traffic
fatalities in Alaska were alcohol-related. United
States data from the National Highway Traffic Safety
Administration states that crashes in the United
States are down from 50 percent to 38 percent in 1998.
Ours are up, 44 percent just last year.
What does this mean to you? It means that we've got a
big problem. We've talked about the problem; we need
to start somewhere. Alcoholism is a disease. It's
treatable. It requires dollars; that's your job, as a
legislature, to find us those dollars.
In concluding, I would like to also mention the
problem with teen drinking. I strongly urge you to
listen to what Kathy Boggs-Gray had to say about the
teen drinking. We have, in the 1999 behavior-risk
surveillance survey, almost 60 percent of the kids
reported drinking in the past month. These kids are
... four times more likely to cause a fetal crash
while driving under the influence. ... The problem I
see is that we have a situation where the teens are
getting drunk [and] many of them are doing it in a
risk situation. And [in] the school system here in
Anchorage you are expelled after your second offense.
But now what we have are 12- to 16-year-old kids on
the streets because they're out of school. The
programs that we have, the few that we have that are
excellent, cannot possibly meet the needs of this
impact. What I would like to suggest you do is take a
look at what's happening on our streets with our kids,
put a face on it; that's what it's about. ...
In concluding, I'd just like to say that the DWI
taskforce from Anchorage did make recommendations on
the drunk driving problem in our state, and did ask
for an alcohol tax user-fee increase. Ten cents a
drink doesn't seem to me, as an emergency nurse, to be
that much money.
Number 0902
REPRESENTATIVE ROKEBERG asked Ms. Lillibridge if she had
testified on HB 4.
MS. LILLIBRIDGE answered that she had not.
REPRESENTATIVE ROKEBERG stated that HB 4 is the omnibus drunk
driving bill, and that her testimony was perfect for that bill.
Number 0964
DICK ELLSWORTH, Owner, Ivory Jacks, testified via teleconference
in opposition to HB 225. In response to Representative Halcro's
concern he stated that he does have a drink list. He said:
Obviously, I'm against this bill. I think it's
nothing short of a prohibition. I don't know where
all these figures come from. ... I went through the
list of 109 liquor licenses in the Fairbanks North
Star Borough, and I figured 72 of them were very
questionable to hang on out of the 109. ... Obviously,
the ones that are going to hang on are the big chain
hotels, which do employ some people locally, but the
profits go Outside.
I think it will also encourage crime. Bootlegging,
I'm sure, will make a lot of people rich. And the
state and municipality had had a history of ...
shortening the bar hours, ... so they encourage after-
hours places, and you rarely hear of an after-hours
place being busted. And, of course, people that have
liquor licenses can't afford to start an after-hours
place because they're risking their liquor license,
but the people who don't have a liquor license ... are
just risking a slap on the wrist and confiscation of
that night's liquor supply.
... I don't think this bill is going to be a source of
income if a lot of the liquor licenses that you're
trying to get it from aren't around to give it to.
Who's going to take care of those employees that are
out on the streets? I have 16 in my little roadhouse.
We've had the place since 1980, and my wife and I have
helped out hundreds of charities since then. ... I
hope some of the money can take care of the people
that the bars have been supporting. ... The bar owners
and restaurant owners have tried to get a bill through
for 13 years, which would have been video gambling;
it's a source of income, and that's been turned down
every year. That would have taken care of the
municipalities (indisc.) and the charities.
Number 1311
LARRY HACKENMILLER, Owner, Club Manchu, testified via
teleconference. He stated that he doesn't have a price list but
everyone knows that his drinks are the cheapest. He said his
clientele consists of lawyers, truck drivers, Teamsters,
operators, plumbers, pipefitters, and [other] union people. If
the tax is increased, those people will probably ask their
employers to help make up their cost-of-living increase, which
will apply to the CPI [consumer price index] in Anchorage.
MR. HACKENMILLER stated that he would support this bill
regarding the removal of the statute that allows the cities and
boroughs to tax [at] any rate; he thinks this restriction is
necessary to prevent hysteria and propped-up costs to recover
budget shortfalls. This would be a discriminating tax, he said,
and borders on being a penalty on persons who have not been
found guilty of any crime and who have not been given due
process.
MR. HACKENMILLER said he appreciates that the $500 million
figure was brought down to $250 million, but he even questions
that. He referred to the language "negative consequences" and
said it applies to driving a car and hunting as well. He also
said he thinks the extent of the costs from 1983 are the only
mathematically correct numbers in "this whole bag of
statistics."
MR. HACKENMILLER told members that if this is to be used to get
an alcohol tax, then the same formula should be applied to the
annual budget spending. He suggested that the legislation first
get its spending in order; then, if alcohol abuse is a state
problem, all state citizens should pay the costs. He remarked:
I like this idea, though, about these user fees;
that's a great concept. ... Well, I don't have any
kids going to public school right now, and my borough
requires me to pay $9.5 million. The state law says
they have to collect $4 million in my urban area. ...
I know you're probably going to do this, now that
you've got this user-fee attitude. You're going to
come out with a bill that basically says ... if you do
have kids going to public school, you get to pay all
those costs. ...
Another thing too: We got some numbers today about
how everything works great Outside when they increase
the price of alcohol. Well, maybe we should be
sending our people out there, because if we're still
spending $250 million a year after we close the bar
hours [and] have increased drunk driving arrests, ...
it's not working. ... We need to either audit that or
take a look at that from a better point of view. ...
If this is a statewide problem, then it should be
statewide tax. And I don't think we have to have a
tax if we're spending $500 million more a year than
what were taking in.
Number 1590
REPRESENTATIVE ROKEBERG mentioned discussion in the legislature
about bringing together both sides of this issue and having some
bargaining negotiations. He asked Mr. Hackenmiller whether he
was aware of that.
MR. HACKENMILLER responded that the state CHARR had a board
meeting in Juneau and discussed the possibility of an increase
in the excise tax. The board came to a consensus that they
would readily accept an increase in alcohol taxes, but would not
support 300 percent or more.
REPRESENTATIVE ROKEBERG asked Mr. Hackenmiller whether he
supports the provision that allows the municipalities to make
additional taxes.
MR. HACKENMILLER responded that Fairbanks has a 5 percent
alcohol tax, and the borough recently talked about having a 2
percent or 5 percent tax. However, the borough has no alcohol-
related costs or expenses.
Number 1747
RANDY KELSCH testified via teleconference in opposition to HB
225. He stated that he is in the food and beverage business,
and employs about 70 people; he doesn't think that putting a tax
on the business is going to shut him down. He remarked that he
thinks people employed in this business are already on the lower
tier of income and rely on menial hourly wage and tips. Putting
an additional expense on an already expensive item is therefore
going to impact the workforce. He added that he believes
society is responsible for its "weak links" and should not
penalize anybody who is associated with alcohol. He asked
whether a guarantee can be made that if [the legislature]
revises this taxation of alcohol, it will reduce alcohol-related
problems. He added that probably less than 1 percent of people
who come to his establishment are problem drinkers.
[HB 225 was held over.]
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
7:05 p.m.
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